What are the skills that a CTO needs to be successful?

In my last thought leadership editorial, I introduced the concept of the Chief Transformation Officer (CTO) and pointed out that they will play an important role in driving change going forward.

I also discussed some of the personality traits of these executives and how they will benefit companies differently.

Today, we will continue with the McKinsey article focusing on the CTO skill set and what companies can do to enable the success of the CTO.

The CTO skill set: A recipe for success

McKinsey research indicates that although the three CTO archetypes are different, there is a common set of personal characteristics critical to making the role a success. Typically, the ideal CTO is a business generalist who carries a big emotional tool kit, including the curiosity and humility to ask questions across the organization and the diplomatic range to build consensus and enthusiasm across a swath of business units outside the CTO’s direct control. The person in this role must have credibility across the organization.

The job requires walking a line between holding others accountable and providing adequate support. It’s a dual function that not everyone gets right, with some leaning too hard toward cracking the whip and others being too supportive at the expense of the broader mission. The successful CTO:

• Has business acumen. All transformation leaders we interviewed, whether responders, revitalizers, or reinventors, noted the need to be a “connecter”—understanding implications of decisions across the business with a breadth of business experience. Many CTOs, particularly responders who must produce a financial change quickly, noted the need to understand the end-to-end value chain;
• Thinks outside of silos. The effective CTO also has experience across multiple functions or domains. Those we surveyed told us that when initiatives were led out of a particular function, they would fall prey to the biases and preferences of that function, making true transformation more difficult. Senior leaders, including CTOs, who stay in a silo are much less likely to propel a successful transformation than those who take the time to address the gaps in their knowledge base;
• The backgrounds of the CTOs we interviewed supported this point: across responders, revitalizers, and reinventors, leaders came from a variety of backgrounds, often with multiple experiences within a company (for example, technical finance or R&D, profit-and-loss owners, strategy). A minority of leaders wore two hats: transformation and strategy. This situation was most prevalent with reinventors who were changing a company’s underlying business model;
• Can build trust and respect. In many ways, the CTO’s main leverage is through influence, so creating trust and respect are fundamental to being effective. Because they serve as the glue between other executives, CTOs need a potent blend of smarts and emotional intelligence to understand an issue and develop a path forward;
• “You can’t come in and just disrupt the hornet’s nest without a reason,” one of our respondents noted. “I’ve worked with people who are bulldogs, and that wouldn’t have worked in our culture—[you] need to build trusting relationships with leaders to enable the right conversations at the right time;”

• Is a curious and humble listener. Almost all the transformation leaders we spoke with noted their ability to act as a learner who empowers others. Part of that is understanding the big picture but also showing a desire to dive deep into the details. “There were times I had to change my mind because I was wrong, and it was OK,” one transformation leader told us. “You have to be willing to listen to someone who is five layers below you explain it to you, because you don’t know;”
• “You need to be able to put yourself in the operator’s shoes,” said one consumer products transformation officer. “The moment you act as a knower, you will fail. You need to be an orchestrator and a challenger.” Another said she asked questions with a humble approach: “I don’t know this as well as you, but I know enough to know this doesn’t make sense yet;”
• Is confident challenging the status quo. Transformation leaders unanimously noted the need to be comfortable with questioning all levels of the organization. Part of this is having the tenacity and stamina to see things to fruition, by sweating the details and holding peers accountable;
• Respondents also stressed the importance of being able to challenge top leadership. “[My CEO] expects me to be open and direct—to tell him what he needs to know even if he doesn’t want to hear it,” the transformation chief of one retailer told us. “You’re DOA [dead on arrival] if you don’t have that;” and
• Brings out the best in others. Many CTOs noted that their own enthusiasm and personal commitment to change are useful in setting a broader tone. Some said the role was also an accelerator for careers, by giving others new responsibilities and challenging them to do more than they currently do or thought possible. “My superpower is helping people build confidence in themselves,” one transformation officer said.

McKinsey research shows that the overwhelming majority of transformations fail, with much of that failure stemming from leadership or employee resistance to change. A CTO’s ability to galvanize and inspire others is crucial to mobilizing the organization.

Keeps the organization’s energy up. Great CTOs realize that transformations are a marathon, not a sprint. Our research shows that 78 percent of transformation failure occurs after the initial stage, and 55 percent occurs during the long journey of implementation. Leaders who beat the odds are able to keep up the organization’s energy, focus, and commitment to transformation over time. The CTOs we spoke with found creative ways of doing this that fit with their culture. “In one month, we had milestone completion contests; in another month, we solicited crazy ideas to improve the business,” one transformation officer said.

The organization: Five factors that position a CTO for success

In our experience with hundreds of transformations worldwide, we’ve found that the most successful CTOs benefit from strong and sustained organizational support so they can drive true transformation.

This support most frequently manifests itself in five ways.

Unwavering support from the CEO

The McKinsey article points out that CTOs are most successful when they are positioned as a peer to the top team and C-suite, operating with the full backing of the CEO in words and deeds. These CTOs often point to a CEO who is willing to engage and make the tough calls (including turning others away if they try to make an end run around the CTO). As one CTO put it, “I am a confidant to the CEO.”

A CTO must have a license to engage all employees

The McKinsey article adds that its research has shown that transformations are far more likely to succeed when a significant percentage of employees meaningfully participate in driving the change (for instance, by owning an initiative). CTOs must have the mandate to mobilize the broader organization. A CTO’s direct team can be small, but its organizational footprint should be large. “We have over 350 people involved,” a CTO told us. “Not everyone is an initiative owner, but everyone has objectives related to initiatives.”

A CTO must be a well-oiled ‘execution engine’

The transformation office—and the new operating speed that goes with it—is central to the CTO’s ability to deliver real and lasting change. As one CTO noted, “We are going into year three and I still maintain a weekly cadence, which is critical to maintaining the success and momentum of our transformation.”

A robust incentive program

McKinsey research shows that companies that implemented financial incentives tied directly to transformation outcomes achieved almost a fivefold increase in total shareholder returns. One CTO referred to himself as “the chief bonus officer.” However, the most successful transformations typically deploy a mix of financial and nonfinancial incentives, all the while keeping in mind the variety of factors that motivate employees.

Emphasis on the ‘soft stuff’ (to drive hard results)

Several CTOs we interviewed emphasized the importance of changing mindsets and behaviors, which is critical to creating sustained performance improvement and to helping employees build new capabilities. In some cases, CTOs said they used the transformation office as a “leadership academy” to train the next generation of high performers at the company.

The McKinsey article adds that the CTO role is unique by design, requiring a versatile leader with the conviction and flexibility to adapt to whatever circumstances arise. The CTOs we spoke with said they truly enjoyed the job, while noting the high-risk, high-reward nature of it. “The work is incredibly exciting and impactful,” one leader told us. “It is also very time intensive and emotionally taxing.” In this era of nonstop disruption, consumer companies that recognize the value of the CTO role are positioning their transformations to succeed as well.

Phahlani Mkhombo is the MD of Genesis Corporate Solutions and is a Senior Business Rescue Practitioner.